Nokia cuts 14,000 jobs after 69% profit plunge

The new Nokia logo will be displayed on the phone and the Nokia logo will be displayed on the screen.

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Nokia It said on Thursday that up to 14,000 jobs will be cut as part of a cost-cutting plan following a third-quarter revenue decline.

The Finnish telco said it would reduce its cost base and increase operational efficiency to “address the challenging market environment”.

It aims to reduce its cost base by 800 million euros ($842.5 billion) from 2023 and 1.2 billion euros by the end of 2026 on a gross basis.

This will reduce the current workforce of 86,000 to 72,000 to 77,000.

The significant layoffs come after Nokia reported a 20% year-over-year decline in third-quarter net sales to 4.98 billion euros. Profits for the period fell 69% year-on-year to 133 million euros.

Earlier this year, Nokia’s competitor Erickson It announced plans to hire 8,500 workers as part of a cost-cutting plan.

Nokia, one of the world’s largest telecom equipment makers, faces headwinds from a slowing global economy and infrastructure cost-cutting by mobile operators.

Sales from Nokia’s biggest unit by revenue, its mobile networks business, fell 24% year-on-year to 2.16 billion euros, with the division’s operating profit diving 64% year-on-year.

Nokia said this was mainly driven by a decline in North America. The company described sales volumes in key market India as “neutral” as 5G deployments are “normal”. 5G is the next generation of mobile internet that promises faster speeds, and is part of Nokia India’s technology.

Cost-cutting measures have taken place in the US this year, particularly with carriers like Verizon and AT&T.

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Nokia CEO Becca Lundmark said in a statement on Thursday that the decline in mobile networks’ revenue “resulted in some moderation in the pace of 5G deployment in India, which means there is not enough growth to offset the slowdown in North America.”

The company still expects full-year net sales between 23.2 billion euros and 24.6 billion euros, sticking to its forecast.

“I remain confident in the fundamental drivers of our business,” Lundmark said.

“As data traffic continues to grow, and with the exception of China, where 5G rollout is still only 25% complete, networks will continue to invest. The cloud computing and AI revolutions will not happen without significant investment in networks with massively advanced capabilities.”

Nokia’s numbers come after Sweden’s Ericsson released third-quarter results on Wednesday, which showed similar problems with revenue in North America.

Ericsson CEO Borje Ekholm warned in a statement Wednesday that “fundamental uncertainty will impact” its mobile networks business until 2024, casting doubt on the recovery for telecom equipment makers.

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